Indirect tax snapshot
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Value Added Tax (VAT) is the main type of indirect taxation in Senegal.
It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods, and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply ie the sale.
A business registered for the tax will charge VAT (output tax) on its sales, and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a credit of VAT is registered and refund can be claimed.
A transaction is within the scope of Senegal VAT if the following conditions are met:
• it is a supply of goods or services. Although the term ‘supply’ is not defined in the legislation, it has a broad interpretation
• it takes place in the Senegal(territory)
• it is made by a taxable person. For these purposes, a taxable person is a person or entity who is registered for VAT in the, or has a liability to become registered
• it is made in the course or furtherance of any business carried on by that person or entity
• service provided and taxable is used or exploited in Senegal
• service provided and taxable is done in order or in benefit of a Senegalese tax payer.
There are three rates of VAT that are applied to goods and services in Senegal; the standard rate, the reduced rate, and the zero rate. In addition, some goods and services are exempted from the tax.
Businesses that make exempt supplies are unable to claim all of the input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost.
Most goods imported into Senegal from outside are subject to VAT. The tax will have to be paid by the importer at the time of importation. VAT is collected by custom duty officers. Where the importation is for business purposes and the importer is registered for VAT, it may be possible to reclaim the tax (subject to certain rules).
VAT is collected at the same time than Customs duty. Once the duty (and VAT) has been paid by the importer, the goods are in ‘free circulation’ and they can then be released for use in the home market. Unlike other indirect taxes, such as VAT, once the duty has been paid it is not usually recoverable by the importer. It therefore represents a bottom line cost to the importing business if it cannot be passed on in higher prices. It is therefore very important to ensure that the correct rate of duty is applied. VAT is charged on the value of the importation, including any custom duty.
Yes they do. They have to appoint a VAT representative to act on his behalf for VAT purposes where the person:
• is a taxable person or makes taxable supplies in Senegal
• is not established, and does not have a ‘fixed establishment’ in Senegal.
If the fiscal representative is not appointed, the Senegalese partner (client) is liable for payment of VAT as they are considered as the default representative.
VAT returns have to be submitted each month and the latest on 15th of the following month.
For some tax payers, returns and payments have to be submitted electronically.
Electronic submission system is not yet general.
A default surcharge penalty may be imposed by the tax authority if VAT returns are not submitted on time, or the related tax is not paid by the due date.
For the late submission or payment, the tax authority will issue a notification to the taxpayer confirming that a fixed percentage penalty may be imposed considering the lack of compliance.
If there is no VAT return for the taxable period (month) a lump sum fee penalty is applicable in case of a delayed declaration.
Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.
Civil penalties and interest can be applied for errors and omissions made on tax returns, or where the tax is paid late. Penalties can also be applied where the business has failed to maintain adequate records, provide information (including additional declarations), or makes repeated mistakes.
Criminal sanctions can also be applied to VAT collected hijacking attempts, the action is considered a misappropriation of public funds.
A VAT invoice must show:
• an invoice number which is unique and sequential
• the seller’s name and address
• the seller’s VAT registration number
• the invoice date
• the time of supply (also known as tax point) if this is different from the invoice date
• the customer’s name and address
• a description sufficient to identify the goods or services supplied to the customer
• the rate of any cash discount
• the total amount of VAT charged expressed in XOF.
For each different type of item listed on the invoice, the following must be shown:
• the unit price or rate, excluding VAT
• the quantity of goods or the extent of the services
• the rate of VAT that applies to what’s being sold
• the total amount payable, excluding VAT.
Where a VAT invoice includes zero-rated or exempt goods or services, it must:
• show clearly that there is no VAT payable on those goods or services
• show the total of those values separately
• show an official stamp of exoneration (only in case of conventional exoneration).
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